Improve Credit Scores Fast

Credit score not where you would like it to be? Are you preparing to make a large purchase and want the best interest rates possible when you finance? It is recommended that you check your FICO score 6-12 months before a large purchase to allow time to correct any errors and increase your credit score to obtain the best deals. This article will define a credit score and convey tips for improving your score fast. Let’s get started!

Things you’ll need

Computer

Letter writing supplies

Time

Step 1

What is a credit score? A credit score is a number that measures your personal risk. It is a snapshot in time of your credit reports. The most widely used credit score is provided by the Fair Isaac Corporation and is called a FICO score. Lenders purchase your FICO score from three companies. The companies are: TransUnion, Experian, and Equifax.

Reports from these companies allow lenders to assess your credit risk at a point in time which help them make credit decisions. The FICO score affects the amount of credit that is available to you and the interest rates offered by the lender. Your credit score is also used by car insurance companies and perspective employers to determine your “qualifications”.

For these reasons, it is beneficial to improve your credit score as quickly as possible! Request a copy of your credit report from each of these three companies as soon as possible. Under the Federal FACT Act amendments to the Fair Credit Reporting Act, you can receive one free copy per credit reporting company, per social security number, per year. You can request your reports online, with a letter, or by phone. I have provided you with the links to each credit reporting agency in the Resource Section below.

Step 2

To begin improving your credit score, be sure to pay all bills on time and reduce credit card debt to 35% of your credit limit as quickly as possible. Start with the credit card or loan that is smallest and/or has the highest interest rate. For example, your credit limit is $5000 x .35 = $1750. Pay off any balance over $1750. Paying off all credit card debt is the ultimate goal, but at the 35% level, your credit score will actually move up faster. When you reach the 35% level, take them down to 25% for another short period of time. This consistent decrease in your debt will increase your credit score.

Because it takes longer to increase a credit score than it does to decrease it, you must diligently work at increasing your credit score. Do not apply for an abundance of new accounts. This will take your credit score down. Try to look less risky, not more risky.

Although it sounds counterintuitive, don't close old, paid-off accounts. Closing these cards will shorten your credit report and make you seem less credit-worthy. The more good credit you have, the better.

Step 3

Next examine your credit reports. Start with page one and thoroughly examine all your personal information. Be watchful for:

· Mistakes in personal information

· Identity errors

· Inaccuracies

· Suspicious debt that doesn’t belong to you

· Wrong addresses or employer information

Your credit score will decrease if your personal information looks incorrect, suspicious, or is prone to change too often. If you find any errors, you should dispute the information with the credit reporting agency online or by letter as soon as possible. This can be a very simple hand written letter stating why this information is incorrect or you can choose to use a free letter template like those offered from Microsoft Office templates. You will usually receive information about their investigation within 30 days. I have included a link in the Resource Section below.

Step 4

Avoid excessive inquiries! A large number of inquiries to your credit report over a short period of time can be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or overextending yourself by taking on more debt than you can easily repay. Apply for new credit in moderation.

Step 5

If you have followed the above steps, you credit score will increase dramatically. However, it will take a little time. Just remember, lenders believe that anyone having debt at 36%+ of their income is a credit risk. Stay below that 36% debt-to-earnings ratio, pay your bills on time, and keep credit inquiries to a minimum, your credit score will improve very fast.